Manmohan Singh wins the first stage of his nuke gamble

At last, he has done it – after looking like a weak prime minister of India for most of his four years in the job, Manmohan Singh has exerted some authority and forced his Congress Party-led government to go ahead on its long-delayed, proposed nuclear deal with the United States. In the process, he has driven Communist-led Leftist parties from their government-supporting role and is actively courting new allies so that the administration can stay in power.

This has been going through the works for the past week or so, but was visibly confirmed today in Toyako when, on the margins of the G8 meeting, Singh discussed with President George W. Bush how the deal can be brought to conclusion before the U.S. elections in November.

“I am very pleased with the state of our relationship, which has truly acquired the characteristic of a genuine strategic partnership,” Singh said after the meeting, using words that underlined the main point on which the anti-U.S. Leftist parties base their opposition to the deal. He had threatened not to go to the G8 meeting if he did not have the draft deal in his pocket.

India’s next step is to seek approval from the United Nations’ Geneva-based International Atomic Energy Agency (IAEA), which confirmed today that the deal’s draft nuclear safeguards have been submitted to the agency’s board of governors. There have been reports that it will be formally considered on July 28.

Then India will need approval from the 45-nation Nuclear Suppliers Group (NSG), where there might be some opposition because India has not signed the international nuclear Non-Proliferation Treaty, and finally approval from the U.S. Congress. There will be opponents at each stage.

The government is pinning its not unrealistic hopes of survival on support from the Uttar Pradesh-based Samajwadi Party, which has suddenly become a friend of the Congress Party after four years of bitter personal animosity between its leaders and Sonia Gandhi, who heads the Congress Party and governing coalition.

But the Samajwadi’s 39 MPs will not be sufficient on their own to make up for the 59 Leftists, so the government is pulling in other smaller parties to make up the numbers. Some of the 39 are showing signs of defecting and other parties are playing hard-to-get. Extensive horse-trading in terms of personal favors, policy changes, election deals, and what are euphemistically called “suitcases” (of money) is already under way to secure the votes.

The support will probably be tested in a parliamentary confidence vote sometime in the next two weeks so that Singh can demonstrate he heads a stable administration in advance of the IAEA formal meeting. President Pratibha Patil is meeting Singh on July 10 to discuss a confidence vote.

If the government were defeated, India would have an early general election – maybe in November – instead of on its due date of April-May next year.

The deal would lead to contracts worth billions of dollars for European and U.S. nuclear power companies, with France and Russia currently in the lead alongside the United States. Slowly, it would help India to expand its currently tiny nuclear power generation at the same time as maintaining a controversial nuclear weapons program.

Singh is probably privately pleased to be rid of the Leftists. In addition to trying to scupper the nuclear deal, they have blocked many economic policies including cutting subsidies, allow foreign direct investment in general retailing and in defense manufacturing, as well as raising foreign investment limits in insurance companies.

The Left’s exit does not mean that all these policies will now be implemented. In each case, it has been allied with vested interests such as big Indian retail groups and the defense establishment which still wield blocking power.

Some people however will benefit quickly. Anil Ambani, who heads ADAG Reliance companies is close to Samajwadi leaders and has lost out to his rival brother, Mukesh Ambani who runs the RIL Reliance companies, while the Samajwadi has been at loggerheads with Gandhi. He might well now find it easier to iron out any foreign direct investment wrinkles on his proposed merger with MTN, the South African telecoms company, and he might also gain an advantage on other government projects.

It has always been arguable whether the deal is good for India because, as the Left and others say, there is a serious risk that India will have to toe the U.S. line on foreign policy. That would be tested quickly if the international confrontation with Iran escalates because India does not believe in the use of force against its ally.

Most of the nuclear power gains will take many years to be realized, although India’s current nuclear power stations will be able to obtain supplies of much needed uranium. There will be other gains for Indian companies involved in nuclear-linked technology because they will find it easier to obtain components, and tender for contracts, internationally.

But before all this can happen, the government has to get through the next couple of weeks and prove it has a parliamentary majority. My bet is that it will succeed – although it will probably be a last minute cliff-hanger as potential supporters hold out for as many benefits as possible.